How do you Monetize Facebook and Snap Chat, the experts aren't sure...

Expanding a bit of what the marketing outlook is for a firm like WPP, Martin Sorrelll CEO was interviewed by CNBC last month. The key concept for what he sees as the future of data and marketing is “Amazon is the biggest threat to Google in search” and “Snapchat could be the third force in the digital ad market behind Alphabet and Facebook”

The amount spent on Google ads compared to other search tools show how effective a platform it is to advertise on. That aside Google through its analytic tools makes it a highly useful resource to study the market and monetize your message.

Sorrell goes on to explain that he sees Amazon as posing a real challenge to Google, as far as driving actual sales. It is the search on Amazon that poses the greatest threat, “Amazons tentacles are spreading rapidly into all areas”.  

Not only is Amazon a force to be reckoned with in the area of search and sales; its Echo product has complete changed the world of marketing. It takes consumers comparison shopping out of the equation. Buying is driven by prior purchase history and brand preference mostly.

Now consumer goods producers will just need to find new way for their products to be suggested by Alexa and the brand relationship will be set.

Sorrell said Google and Facebook represent 75 percent of spending on digital; and he hopes this changes to more of a balance; these two sites do not represent the silver bullet marketers and companies should rely on. Last year on behalf of their clients WPP spent just under $5 billion on Google advertising in 2016, an increase of $2 billion from the year before.

To give you a sense of what WPP spent on other media; it spent $1.7 billion on Facebook and $90 million on Snapchat. Sorrell said he believed ad spend for Google this year could reach $6 billionand Facebook could reach 2.5 billion.

Sorrell sees the threat to Facebook to be from Snapchat, he believes the spending is currently “relatively insignificant” but could become a strong third force to be reckoned with.

The problem with WPP spending (possibly) $2.5 billion in 2017 in ads on behalf of clients, is the results are not always as clear. That is the weakness in using a platform that reaches the masses but has little analytics behind it. Facebook is simply not built that way. Google has analytic tools and technology (obviously) and Amazon has their own data driven by sales of products. The frustrating thing for admen like Sorrell, I would surmise is the frustration with clients constantly looking to use Facebook as the preferred avenue of ad spend, with little knowledge of its success to be gleamed.

Sorrell goes on to point out the reason Google has been a success, is “the results are very clear”. Facebook is more effective (according to him) as a brand mechanism; as a way of building brands rather than driving sales. Which I would image is advantageous for social ideas and campaigns but not as a successful funnel for consumers.

My own opinion as it relates to social media channels the likes of Snap, Instagram, Facebook, Twitter, and Sorrell makes this point as well, you must be able to eventually demonstrate return on investment. Which has been the sticking point in the various finance classes I have attended; colleagues analyze new tech firms, such as Twitter, Instagram, Uber; the same issue constantly comes up, they are not profitable in the beginning, the breakeven point is five years into the future, the IPOs are priced outlandishly and likely by the time the firm gets to year five their attritions are in the gutter and they are yesterday’s news. The same can’t be said for Amazon or Alphabet.

Source:

http://www.cnbc.com/2017/03/01/amazon-is-the-biggest-threat-to-google-in-advertising-snap-facebook-thraet-martin-sorrell-wpp-ceo-says.html